Elkins officials not happy with PSC rate ruling

Water charges slated to go down, then straight up

June 15, 2013

Elkins city officials aren't happy about the state Public Service Commission's ruling on proposed water rate increases, although the city's water customers will be paying more - eventually.

The city had proposed raising water rates gradually, over two stages. However, two local public service districts protested the increases, and the PSC ruled that Elkins could raise rates over three stages.

After the PSC's ruling, Elkins water rates will now actually decrease in the first two stages for residents and businesses, and then rise dramatically in the third stage.

"We're still trying to understand the logic of the decision," City Treasurer Lisa Daniels-Smith said this week, during a joint interview with Elkins Operations Manager Bob Pingley.

"The PSC felt the rate increases weren't justified," Pingley said.

City officials had wanted to increase the rates gradually: the first step would have been an increase of 6.3 percent for residential and commercial customers, and a 55.49 percent increase on PSD customers.

The second step in the city's proposed plan would have been a 28.95 increase on residential and commercial customers, and an 86.57 percent increase on PSD customers.

The Huttonsville and Midland PSDs protested the rate increases, however, and the PSC ruled in April that Elkins could raise water rates in three stages.

"There was an appeal process, but the city was advised by counsel (Charleston attorney Robert R. Rodecker) against it," as a "futile effort," Pingley said.

In the first stage, which went into effect May 29, the city's residential and commercial customers' rates decreased by 3 percent. There was no change to the city's PSD customers' rates.

"Customers should see the difference on next month's bill," Daniels-Smith said.

The second stage will begin once the Huttonsville PSD substantially completes its water plant project. Residential and commercial rates will decrease by 4 percent in the second stage, and, once again, there will be no change to the city's PSD customers' rates.

"I can't see the logic behind dropping the rate after Huttonsville completes its project," Pingley said. It is unclear whether Huttonsville will continue to buy water from Elkins after the plant is completed, he said.

The third stage will commence once the Elkins water plant project is substantially completed. In this third and final stage, residential and customer rates will rise 62 percent, while PSD rates will increase 200 percent.

PSDs now pay $1.82 for a thousand gallons of water from Elkins; after the third stage increase, they will pay $3.83 per a thousand gallons, officials said.

"We hope to break ground on the new Elkins water plant this fall," Pingley said, adding the project should then be completed in about two years.

Pingley and Daniels-Smith said the PSC's three-stage rate increase decision should not have any negative effects on the city's ability to build a new water plant.

"The water plant project is completely separate from the water fund. We're receiving separate funding for the water project," Daniels-Smith said.

Pingley said the third step of the rate increase is designed to pay off the principal and the interest on the bond notes needed to build the water plant.

Both Pingley and Daniels-Smith said the two small rate decreases - leading up to the major rate increase - will not damage the water department's financial stability.

"The city's water fund is a stable fund," Daniels-Smith said.

"It will just cut a lot closer to the bone than we'd like," Pingley said. "We'll just have to deal with it."